Economy Watch: Unemployment Claims Drop as Year Comes to Close
U.S. workers filing applications for unemployment dropped the week ending Christmas Day; 2010 saw 157 banks fail; and the NAR Pending Home Sales Index rose.
By Dees Stribling, Contributing Editor
Though weekly unemployment claims can be frothy as an economic indicator, sometimes they seem to reflect the economic zeitgeist–or at least, the nation hopes so here at the end of 2010. That’s because the number of U.S. workers filing applications for jobless benefits for the first time dropped to 388,000 the week ending Christmas Day, according to the U.S. Department of Labor on Thursday.
That’s the lowest level since July 2008. The less volatile four-week average of new claims also reached down to levels not seen since the summer of 2008, falling to 414,000.
After the first of the year next week, the Labor Department will publish U.S. unemployment numbers for December, and they are expected to show considerable employment growth–but probably not enough to dent the 9.8 percent official unemployment rate as the pool of job seekers expands.
More banks went under in 2010 than year before
The final tally for bank failures in the United States in 2010 is 157, according to the Federal Deposit Insurance Corp., the agency tasked with mopping up all those messes. That number is up from 140 in 2009 and way up from the prerecessionary year 2006, when zero U.S. banks failed. In fact, 2010 saw the highest financial institution failure rate since 1992, a year in which a lot of savings and loans gave up the ghost.
Then again, the total assets of the banks that went under in 2010 was $92.1 billion. In 2009, the total was $169.7 million. Lately many of the belly-up financial institutions have been local and regional players whose ill-timed real estate loans from the mid-2000s have finally caught up with them.
Will 2011 be as bad, or worse, in terms of busted banks? Since bank failures tend to be a lagging indicator, even if the economy shows some pep in 2011, there could well be as many if not more bank closures in the next 12 months as during the last 12 months. The FDIC list of sick banks–those whose problems “threaten their continued financial viability,” to put it in banker-ese–had 860 undisclosed names on it at the end of 3Q10. In the past, roughly 20 percent of those institutions on the list ended up kaput.
NAR Pending Homes Sales Index edges up
The National Association of Realtor’s Pending Home Sales Index, a forward-looking indicator, rose 3.5 percent to 92.2 based on contracts signed in November from a downwardly revised 89.1 in October. The index is 5 percent below a reading of 97 in November 2009. The data reflects contracts and not closings, which typically occur with a lag time of one or two months.
Always-a-silver-lining Lawrence Yun, NAR chief economist, said that historically high housing affordability is boosting sales activity–that is, all those depressed home values that were in the news earlier this week, though he didn’t quite put it that way. “In addition to exceptional affordability conditions, steady improvements in the economy are helping bring buyers into the market,” Yun said in a statement. “But further gains are needed to reach normal levels of sales activity,” he added in an understatement.
Thursday was a day of profit-taking on Wall Street, with the Dow Jones Industrial Average dropping 15.67 points, or 0.14 percent. The S&P 500 and the Nasdaq both declined 0.15 percent.